New York AG sues FedEx unit over contractor issue

New York Attorney General Andrew Cuomo is suing Federal Express' ground package delivery unit, alleging its classification of drivers as independent contractors illegally deprives them of legal protections workers enjoy.

The lawsuit accuses FedEx Ground Package System Inc. of concocting "an elaborately structured scheme to cast its driver employees as independent contractors," while regulating drivers' hours, job duties, routes and even the clothing they wear on the job.

Cuomo, a Democrat currently running for governor, filed the lawsuit Friday in New York State Supreme Court.

Maury Lane, a spokesman for Memphis, Tenn.-based FedEx Corp., said numerous federal and state courts as well as the Internal Revenue Service have upheld the company's contractor system. Lane said FedEx Ground's 12,000 contractor drivers nationwide are well-compensated.

Lane said the lawsuit is without merit, and "a real assault on the American working class."

FedEx claims its drivers are independent contractors, who cannot organize under federal labor laws, and also do not receive medical, pension and other benefits from employers.

FedEx Ground drivers have challenged their contractor status in several courts, and attorneys general in other states have also challenged FedEx over the issue.

After receiving a subpoena, FedEx sued Cuomo in August, seeking to halt his agency's fraud investigation. That complaint argued federal law trumped any state laws Cuomo might cite against FedEx Ground. FedEx said there's a federal prohibition against state laws regulating the prices, routes and services of air carriers.

"Drivers have little or no opportunity to negotiate with FedEx over their rates of pay or other terms of their employment, and are severely limited in their ability to earn outside income because of restrictions imposed by FedEx," the lawsuit says.

The drivers "are clearly perceived by the public to be employees," the lawsuit says, adding that drivers must purchase or lease their trucks, obtain their own insurance, and incur other work-related expenses.

The lawsuit seeks an injunction, and unspecified restitution and damages.